By Brenden West Assistant Editor
The Clinton Herald
---- — CLINTON — Construction of the new Clinton Middle School has put the Clinton Community School District at its sales tax revenue bond borrowing capacity.
To finance what remains of the project, the district may undergo some bonding gymnastics.
Last week, the school board and administration met with Piper Jaffray public finance consultant Matthew Gillaspie. He explained to educators the concept behind Bond Anticipation Notices — a legal strategy used by other Iowa districts to recover sales tax borrowing capacity.
District business director Cindy McAleer said issuing BANs was something Clinton has considered for the last four years.
“It’s a mechanism for short-term borrowing without having to go through the process of issuing regular bonds,” said McAleer, adding there are two ways districts bond. They can either issue general obligation bonds, which require a vote of the public, “or you can do sales tax revenue bonds.”
For the latter, “we borrowed what we could in 2013 knowing we would have to borrow more,” she said.
In 2010, CCSD borrowed $30 million to pay for its high school addition, a new swimming pool and to kick start a payment of the new middle school. By 2013, when it came time to construct the middle school, the district still needed $11 million, but its sales tax revenue bonding capacity allowed it to borrow only $5.3 million, said McAleer.
The BANs allow Clinton to finance the remainder of the project while making repayments more palatable over two three-year cycles. The BANs would be issued this summer and for three years the district would make annual $131,000 interest payments. By 2017, the district would issue another BAN for interest payments of $98,000 annually.
By 2020, when the district’s sales tax revenue bonding capacity returns, Clinton will be able to proceed with financing the project as normal through sales tax revenue bonds.
McAleer said the district is jumping through some financial hoops. But none of these actions will effect CCSD’s property tax levy rate.